investing in ireland

Investing in IrelandA survey of foreign direct investorsA report from the Economist Intelligence Unit Sponsored by Matheson Ormsby Prentice

Investing in Ireland: A survey of foreign direct investors

� © The Economist Intelligence Unit Limited 20�2

Contents

About this report 2

Executive summary 3

Introduction: Market access – Ireland’s FDI foundation 6

Four alternatives: Market access drives investment in China, Singapore, the UK and the US 8

The corporate tax infrastructure: An important ingredient 9

The talent base: A differentiator under threat? �2

Ireland’s biggest disadvantages: Outside control of policy �5

Responding to the crisis: Boosting competitiveness at the same time �9

Financial regulation: Getting the balance right 2�

Conclusion: Ireland’s unique selling proposition 22

Appendix: Full survey results 23


2 © The Economist Intelligence Unit Limited 20�2

Investing in Ireland: A survey of foreign direct investors is an Economist Intelligence Unit report sponsored by Matheson Ormsby Prentice. It examines the main factors that bring foreign direct investment to Ireland and the main ongoing challenges in attracting investment. Ronan Lyons was the report author. Aviva Freudmann and Jason Sumner were the editors.

To support this study, the Economist Intelligence Unit conducted a survey of 3�5 global respondents during September and October 20��. All respondents had responsibility for or familiarity with their companies’ investment decisions; and all had familiarity with their companies’ current or prospective investments in Ireland. Overall, 60% of respondents were from companies with current operations in Ireland, and 27% were from companies not currently doing business in the country but planning to invest within the next three years. A small proportion of the sample (about �0%) was not currently invested and not planning to invest in the next three years. Respondents were split roughly equally between large firms (51% from companies with over US$500m in annual revenue) and small firms (49% from companies with revenue below US$500m). They held senior positions in their organisations (87% C-level) and were spread throughout the world: 55% from North America; 2�% from western Europe; and 24% from the Asia-Pacific region or emerging markets. By sector, 49% came from the financial services industry; �5% from the IT/online sector and the rest

came from multiple sectors, including pharmaceuticals.

To complement the survey findings, the Economist Intelligence Unit also conducted wide-ranging desk research and in-depth interviews with several executives and experts. Our thanks are due to the following for their time and insights:

l Lionel Alexander, vice president and managing director (Manufacturing), Hewlett Packard

l Paul Duffy, vice president, external supply operating unit, Pfizer

l John Fitzgerald, head of macroeconomics, Economic and Social Research Institute

l John Herlihy, vice president of international SMB sales, Google

l Bob Keogh, director, Goldman Sachs Bank (Europe)

l Philip Lane, professor of international macroeconomics, Trinity College Dublin

l Sean McEwen, director (Ireland), Abbott

l Peter Neary, professor of economics, Oxford University

l Christian Saller, managing director, KAYAK Europe

l Willie Slattery, executive vice president and head of European offshore domiciles, State Street Corporation

l Michael Whelan, director and chief country officer (Ireland), Deutsche Bank

About this report



Executive summary

Global foreign direct investment (FDI) dropped precipitously from the height of the boom years to the depths of the downturn and is only just now recovering. In terms of jobs created through FDI, the numbers are stark: they declined from an estimated �.3m globally in 2006 to just 750,000 in 2009, according to the 2011 Global Location Trends report by the IBM Institute for Business Value. But by 20�0 there were evident signs of recovery, with almost �m FDI-driven jobs created globally.

Nowhere is this resurgence more important than in Ireland, where FDI played such a crucial role in its economic success before the financial crisis and will determine so much of its economic prospects in the years ahead. And the signs there are pointing to recovery too. According to the IBM report, Ireland was the top destination worldwide in 20�0 for the average value of investment projects, and the second-largest per-head recipient of FDI jobs after Singapore. IDA Ireland, the agency responsible for industrial development in the country, reported a record year in 2011, with 148 new investments creating over �3,000 new jobs. Key questions are whether FDI will continue to grow again in Ireland and what policymakers can do to strengthen the country’s unique selling propositions for investors.

This report seeks to aid that process by examining Ireland’s competitiveness and the challenges it faces in appealing to international investors. It is based on a survey of over 300 executives with responsibility for and knowledge of investments in Ireland, as well as a series of interviews with key FDI decision-makers in Ireland and abroad.

As the report demonstrates, Ireland’s most important competitive advantages are access to EU markets, a competitive corporate tax infrastructure (including the headline rate and a number of other incentives including double-taxation treaties and sector-specific incentives), a uniquely talented workforce – both home-grown and from abroad – and a stable regulatory framework that supports business. Indeed, the survey suggests that investors see Ireland’s unique selling proposition as not a single factor, but the powerful combination of these benefits that Ireland offers. Each of these four cornerstones of Ireland’s competitiveness is explored in detail in this paper: access to EU markets (see page 6); the corporate tax infrastructure (see page 9); the talented workforce (see page �2); and the regulatory framework, including specifically financial regulation (see page 2�).

The survey suggests that investors see Ireland’s unique selling proposition as not a single factor, but the powerful combination of benefits that Ireland offers.



The disadvantages in the eyes of investors, however, are largely out of policymakers hands and include the country’s small size and instability in the euro zone. On the whole, the survey sample and interviewees are bullish on Ireland, with two particularly positive findings emerging from the survey. First, of the 3�5 respondents, only ten say that they plan to reduce their level of investment in Ireland over the next three years. Second, extrapolations from survey responses suggest that the respondents’ levels of investment over the same time frame could create up to 20,000 new jobs. Although this is based on opinion data and is not a rigorous economic forecast, it is a demonstration of investors’ strong confidence in Ireland as a place to do business in the near term. In addition, interviewees overwhelmingly view the financial crisis as an opportunity to boost Ireland’s competitiveness.

The key findings from the research are as follows.

Access to European markets is Ireland’s FDI foundation. Survey respondents and interviewees were clear about the foundation of their investment in Ireland: market access. In general, global investors say their prime motivation for entering foreign markets is access – for 58%, this is the most important consideration, far outweighing the second and third most popular factors, namely availability of key skills (34%) and government incentives (32%). When it comes to Ireland specifically, access comes out on top, with “access to EU market” named by 46% of respondents, compared with 30% citing legal and fiscal stability and 29% citing the competitive corporate tax rate. Other important drivers are also tax-related, including favourable double-taxation treaties (�6%) and sector-specific incentives (14%).

The headline corporate tax rate is important for competitiveness but it should be thought of as

one ingredient in the overall tax infrastructure; and policymakers need to put it in context when compared with other investment drivers. Almost one-half of respondents (46%) say a low corporate tax rate is the most important government fiscal incentive they consider when investing abroad, and this was a particularly important component in decisions to bring investment to Ireland originally. The headline rate is clearly important. However, evidence from the survey and interviews suggests that excessive focus on the headline rate threatens to overshadow the total corporate tax infrastructure including double-taxation treaties, tax credits, transfer pricing or other sector-specific incentives. It also needs to be put in context with other aspects of competitiveness, such as personal income tax reform or access to skills and talent. When choosing among government incentives, pharmaceutical firms were the most likely to cite the corporate tax rate as their biggest draw to foreign markets, with 65% pointing to this factor. Respondents based in the euro zone attached a similar importance to low corporate taxes (64%). US investors put less emphasis on the issue (35%), as did those planning to invest in Ireland for the first time (33%).

Investors praise Ireland’s pool of domestic and foreign workers, but income taxes could be discouraging senior talent. Survey respondents and interviewees say the quality of the local labour force is a strong point, especially the presence of formal qualifications and more innate abilities such as a practical approach to problem-solving. Nonetheless, interviewees are concerned about what they see as imbalances in Ireland’s personal tax system. As a result of tax credits that are generous by international standards, there is a large gap between the average all-in tax rate paid by the typical worker, which is among the lowest in the OECD, and the marginal tax rate for top earners, which is among the highest. Interviewees believe that these high marginal



tax rates will make it less attractive for senior executives to settle in Ireland.

The biggest disadvantages for investors are outside the Irish government’s direct control, but respondents say more should be done to improve regulation and reduce red tape. The biggest downside of doing business in Ireland, cited by 51% of those surveyed, is the size of the domestic market, but this is a factor policymakers can do very little to influence. Three other factors which received more than 30% of responses included instability in the euro zone (33%), uncertainty in relation to government finances (32%), and Ireland’s peripheral location (3�%). Ireland’s location mattered more to financial services firms than other sectors participating in the study, highlighting the importance of clusters. Investors across the board say Ireland could improve on regulation and red tape.

Ireland is generally perceived as a more costly place to do business than other investment locations. According to investors, Ireland compares unfavourably with other countries across a range of cost criteria, with wages and salaries the biggest concern: 5�% say Ireland is more expensive than other locations where they are invested, compared with �6% who say it is cheaper. The cost of raw materials, the cost of living and the price of utilities and infrastructure also compare unfavourably. The high cost of doing business was highlighted across all sub-groups in the survey, but the perception is greatest among those with no presence in Ireland and no immediate plans to invest. There were variations according to location – euro zone and US investors were much more likely to believe Ireland was a costly place in which to do business than investors from other developed countries.

Respondents believe the Irish government’s post-crisis response is on the right track and view the country as an investment opportunity. While there was little belief among respondents that Ireland would rebound quickly, there was definitely a sense, particularly among interviewees, that Ireland’s economic crisis represents a huge opportunity from an FDI perspective. Overall, investors have more faith in the current Irish government than the previous one, although views are far more favourable among investors currently located in the country than among those based outside. The government’s priorities are also in line with investor expectations – stabilising the financial system, attracting inward investment and addressing the budget deficit.

Some post-crisis policies will not require trade-offs between stabilising the financial system and boosting Ireland’s investment competitiveness, but in other areas policymakers will have difficult choices. Tackling the high cost of doing business in Ireland is both a domestic vote-winner and a competitiveness-booster. Likewise, tackling the deficit supports both domestic economic sustainability and convinces international investors that Ireland is a sound place in which to do business. Other aspects of Ireland’s recovery, however, have very real trade-offs. One example is higher value-added tax, which may help close the deficit but pushes up Ireland’s already high cost of living, affecting competitiveness. Another potentially more serious issue is the area of financial regulation, where interviewees believe that the government has failed to distinguish adequately between regulations on domestic banking and those on international financial services.



Market access – Ireland’s FDI foundation

The single most important reason why companies in the survey look to invest in countries outside their home markets is to access new markets: three in five (58%) respondents highlighted market access as one of their top three motivations for setting up international operations, ahead of eight other factors, including availability of key skills (34%), government incentives (32%) and ease of doing business (32%). The respondents’ four top FDI locations other than Ireland all offer market access as a key part of their competitive proposition, either domestically, as in the case of the US and China, or regionally, as with Singapore and the UK (see sidebox, this chapter).

Financial services and the rest – differing FDI prioritiesThe importance of market access is similar across financial services (FS) and non-financial services (non-FS) respondents, with 55% of non-FS respondents mentioning it as a key factor for going international, compared with 6�% of FS respondents. There were differences in secondary factors, though. Government incentives and the ease of doing business are both mentioned

by almost 40% of FS respondents, compared with about 25% of others. In turn, the cost base matters more for non-FS respondents, with over 40% mentioning either labour or non-labour costs as a factor for going international, almost twice the level of FS respondents.

Ireland’s specific advantage: access to the EUWhen asked specifically about Ireland’s main competitive advantages, access to European markets topped the list, with 46% of respondents citing it, much more than any other factor (see Figure 1). Interviewees’ opinions reflected the survey findings. “A major factor behind Ireland’s success in the �990s, and a key differentiator between Ireland of the �970s and of the �990s, was improved access to the EU as a result of the Single Market,” says Peter Neary, professor of economics at Oxford University.

Differences between first-time investors and those with existing operations in IrelandThe factors stressed as Ireland’s main competitive advantages by those planning to invest there for the first time generally mirror those cited by the sample as a whole, with access to EU markets (44%) the principal competitive advantage,

Introduction

A major factor behind Ireland’s success in the �990s, and a key differentiator between Ireland of the �970s and of the �990s, was improved access to the EU as a result of the Single Market.

Peter Neary, professor of economics at Oxford University



In your view, which competitive advantages does Ireland have to offer?Respondents could select up to three responses(%)

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although greater emphasis was placed on access to government and ease of doing business. Access to skills, either locally or from across the EU, was less important: just 36% of respondents mentioned either factor, compared with 5�% of all respondents.

For respondents with existing operations, the corporate tax rate was the main driver that had brought them to Ireland originally. It was cited by nearly one-half of these respondents, and according to almost one-third the corporate tax rate will continue to underpin the attractiveness of Ireland’s business environment (in addition to

other aspects of the corporate tax infrastructure, such as double-taxation agreements). For first-time investors the picture is different, with access to EU markets the most significant factor. For financial services particularly, the presence of a cluster of similar companies doing similar things was also important for an ongoing presence. “Ireland, in particular Dublin, thanks to the International Financial Services Centre (IFSC), is a global centre of excellence for mid- to back-office staff,” says Bob Keogh, director of Goldman Sachs Bank (Europe). “Just as Mayfair teems with traders, the IFSC has a core of people at work in the sector for the long term.”

Ireland, in particular Dublin, thanks to the International Financial Services Centre (IFSC), is a global centre of excellence for mid- to back-office staff.

Bob Keogh, director of Goldman Sachs Bank (Europe)



China

Singapore

US

UK

Four countries topped the list of alternative investment locations for respondents besides Ireland: China (33%), Singapore (29%), the US (28%) and the UK (27%). The remaining �6 options each received less than 20% of responses. Among financial services firms, China was even more attractive (35%), while Hong Kong displaced the UK as the fourth most attractive destination (25%, as against 23% for the UK). Other popular FDI hosts in western Europe were the Netherlands, Switzerland and Belgium, chosen by 13%, 10% and 4% of respondents respectively.

Among the top four destinations, the main driver was market access, either domestically

(the US and China) or regionally (Singapore and the UK). After market access, each of the top destinations had different investor propositions (see Figure 2: Word clouds). China’s proposition is clearly based around its role as a growth market as well as its low cost, including taxes. Singapore’s offering is based around a stable system, ease of doing business and low taxes. Investment into the US focuses on its domestic market and the business opportunities there, while the UK’s offering is about market access, ease of doing business and skilled labour.

Four alternatives: Market access drives investment in China, Singapore, the UK and the US

Figure 2. FDI propositions: Word clouds (main reasons why respondents chose FDI locations)



The corporate tax infrastructure:An important ingredient1

Following the EU-IMF loan to Ireland in late 2010 and Ireland’s ongoing fiscal deficit, the country’s headline corporate tax rate has become a pivotal issue in its relationship with the rest of the EU. Since then the corporate tax rate has become a symbol of Ireland’s sovereignty, with fears that a higher rate will reduce investment into the country. Overall, the survey shows that the headline rate is part of a larger corporate

tax infrastructure that policymakers must also monitor, and the tax infrastructure can be seen as one of four cornerstones in Ireland’s FDI proposition (along with market access, skills and talent, and a favourable regulatory regime).The survey shows that Ireland’s competitive corporate tax rate is indeed a key component of its FDI proposition. As mentioned above, of those survey respondents who already have

The most important fiscal incentives for investors(%)

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�0 © The Economist Intelligence Unit Limited 20�2

� Malta is not included in the Paying Taxes study and was omitted from the analysis.

FDI operations in Ireland, corporate tax was the single most cited factor originally bringing FDI to Ireland, according to almost one in two respondents (44%). However, it is far from the only factor in the tax infrastructure. As mentioned above, 29% of respondents highlighted the corporate tax rate regime as one of Ireland’s three main competitive advantages (See Figure �, page 7). In addition, 16% mentioned double taxation treaties and 14% mentioned sector-specific initiatives. Taken as a whole, the response suggests that the entire corporate tax package is an important driver for investors and policymakers should not focus only on the headline rate. And as Figure 3 (page nine) shows, other tax incentives play a large role in investment decisions, in addition to the rate.

Double-taxation treaties are also importantIreland’s corporate tax infrastructure is not only about the rate of tax. Another government incentive to be cited by more than one in three investors was the network of double-taxation agreements between countries. This was particularly important for financial services firms (39%) and firms from the euro zone (44%). The network of double-taxation treaties was cited as a key factor by more than one-half (56%) of firms with no presence, current or planned, in Ireland, while it was significantly less important to firms already present and with plans to expand (�9%). Extending treaties in this area could see a new type of investor come to Ireland.

Research and development tax creditsR&D tax credits were cited by �8% of the sample as a whole, but there were some important differences across the sub-sets of respondents. For example, R&D tax credits were cited by just under one in three firms planning to expand in Ireland as important (29%), and also featured as an important issue for information technology (IT) firms (30%) and companies based in developed countries outside the euro zone and the US (32%).

Importance of corporate tax rate differs by sectorThe importance of the corporate tax rate varies significantly by industry, with pharmaceutical firms (65%) and those based in the euro zone (64%) most likely to cite its importance. Firms from the US (35%) attached far less significance to this incentive. For firms planning to invest in Ireland for the first time, the tax rate was also less of an issue (33%), and they attached almost equal importance to transfer pricing rules (3�%).Interviewees urged policymakers to put the corporate tax rate in context with other drivers as well. “While factors such as a common currency and low corporate tax help, it is ultimately Deutsche Bank’s ability to serve many markets from Dublin, thanks to technology, that matters most,” says Michael Whelan, director and chief country officer (Ireland) for Deutsche Bank. Similarly, other interviewees say that when it comes to deciding where to put core business, the key issue for senior management is making profits, with the tax treatment of that profit more an issue for their advisers. It is important also to compare the “effective” corporate tax rate (the headline rate after credits and exemptions) with the headline rate in Ireland and in other countries. Of the �6 euro zone countries shown, Ireland’s effective rate of ��.9% is in line with both the mean (��.8%) and median (�2.7%) rates paid elsewhere in the single currency area.� According to the World Bank, companies in the euro zone are in effect paying similar amounts to those in Ireland.

One of four cornerstonesIreland’s tax infrastructure – which includes not only corporate tax rates but also the network of double-taxation treaties and other taxes – can be regarded as one of four cornerstones of Ireland’s FDI proposition. So while the government is understandably keen to defend a core competitive advantage, excessive focus on corporate tax rate ignores the importance of the wider tax infrastructure, and can also hide changes to Ireland’s competitiveness in other areas. This includes personal income tax rates, which are discussed in the following section.


�� © The Economist Intelligence Unit Limited 20�2

Sources: World Bank; PricewaterhouseCoopers, Paying taxes.

Headline and effective corporate tax rates in the euro zone, 2011(%)

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The talent base:A differentiator under threat?2

Access to skills – both home-grown and from across the EU – is of increasing importance for Ireland’s FDI proposition. Just over one-quarter (28%) of all survey respondents mention the educated and skilled local workforce as one of the country’s key competitive advantages, while a further (23%) mention Ireland’s base of skilled labour from across the EU. (Ireland

was the only euro zone member to fully open its labour markets immediately to the ten new EU member states from Central and Eastern Europe which joined in 2004.) Indeed, when asked to list Ireland’s main disadvantages (see next section for full analysis), a lack of skilled labour was the factor least commonly cited (by just 6% of respondents).

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Figure 5

The reason that Pfizer has expanded in Ireland so extensively is the country’s proven ability – from as early as the late �960s – to deliver. The people are reliable and can handle complexity.

Paul Duffy, vice president with Pfizer



Unique aspects of the workforceThose interviewed for this report particularly stressed their companies’ ability to access a skilled workforce by setting up in Ireland. The country’s domestic labour force is the youngest in western Europe; it is highly educated and benefits from relatively flexible regulations.

While the level of formal education qualifications is one area where Ireland’s local labour force performs strongly, it is not unique in this regard, as Figure 5 shows. However, a number of interview respondents also pointed to innate (and more difficult to measure) advantages of Ireland’s workers. These include the ability to handle complexity and to identify and resolve issues early. Paul Duffy, a vice president with Pfizer, a pharmaceutical company, describes a major factor behind his company’s development in Ireland: “The reason that Pfizer has expanded in Ireland so extensively is the country’s proven ability – from as early as the late �960s – to deliver,” he says. “The people are reliable and can handle complexity.”

Similarly, John Herlihy, a vice president at Google, says: “There is a degree of flexibility, both innate and regulatory, about Ireland’s workforce that is unique in Europe. Perhaps because of Ireland’s history, the spirit is to resolve differences when they are found, and then move on, resolve and move on.”

Attracting top talent – the role of personal income taxesWhile there is consensus among both interviewees and survey respondents about the quality of labour available to firms that set up in Ireland, there is concern about how attractive Ireland will be for talent, especially senior talent, into the future.

For a typical worker, Ireland’s taxes are very low in terms of overall income, but for higher earners it has some of the highest marginal rates in the world. In 20�0 a married couple with one earner on the average wage and two children paid less

than 5% in tax, once all the factors, including benefits, had been taken into account. This was the fifth-lowest percentage in the OECD and the lowest in the euro zone. However, the top “all-in” marginal income tax rate in 2009 for top earners was 50%, one of the highest in the OECD, a situation exacerbated by the introduction of the Universal Social Charge in 20��, a new tax on income.2

There is concern among interviewees about Ireland’s personal income tax regime. “In the area of income taxes, Ireland’s competitiveness has been seriously undermined,” warns Willie Slattery, executive vice-president and head of European offshore domiciles for State Street, a financial services company. Likewise, Mr Whelan of Deutsche Bank says it is “naive to think that personal tax rates can be increased without any collateral damage to Ireland’s FDI proposition”.

According to Mr Herlihy of Google, if Ireland is not attractive to senior executives, around whom operations in Ireland are built, it will find it more difficult to bring new projects here: “Ireland must facilitate key executives to come here. Junior talent joins a company to learn and leave; senior talent comes to build and stay.”

The issue of personal tax rates is relevant to both Ireland’s fiscal correction and its desire to win new FDI projects and jobs. For example, Ireland competes internationally for front-end financial services (trading and investing). Both Mr Keogh of Goldman Sachs and Mr Whelan believe that given the high density of traders in London, if Ireland actually wants to win significant business in this area and bring traders to Dublin, the only way to compete would be through lower marginal tax rates on personal income.

Income taxes – a weakening competitive advantage?Survey respondents were asked to rate the competitiveness of Ireland’s tax regime across six headings, including corporate tax, R&D tax credits or training grants. Income tax was the

In the area of income taxes, Ireland’s competitiveness has been seriously undermined.

Willie Slattery, executive vice-president and head of European offshore domiciles for State Street

2 Figures in this paragraph are taken from the OECD’s Taxing Wages 2010 and Taxation Database.



weakest perceived competitive advantage of the six. In particular, among IT firms surveyed, the net score of favourable to unfavourable in this area was just +3%. Similarly, among firms based in euro zone countries and other non-US developed economies, the net score was positive but small, with the bulk of respondents saying that personal tax rates were about the same as in other investment jurisdictions. For firms planning to invest in Ireland for the first time, personal income tax is viewed as more competitive than in other FDI locations (a net score of +43%). Those planning to invest in Ireland for the first time view the personal income tax system in the country as more attractive than those who are already investing. This gap between firms which are already established and those planning to do so suggests that hidden taxes, such as employers’ Pay Related Social Insurance (PRSI) and the Universal Social Charge, may be an unexpected cost once they have settled in Ireland.

Alternatives for addressing tax competitivenessThe gap between low average taxation and very high marginal income tax rates is just one pressing concern in relation to income tax in Ireland. Another is the Irish government’s need to raise tax revenue significantly, with a deficit of over €16bn projected for 2012, compared with gross government receipts of €53bn. One area to examine is Ireland’s comparatively generous tax-free allowances at lower-income levels. In Ireland, until 20�0, it was possible to earn €18,000 without entering the tax net. In contrast, the tax threshold for workers in France is €6,000 and €8,000 in Germany.

Raising further revenue from income tax does not need to be done at the expense of Ireland’s competitiveness: by bringing tax credits in Ireland into line with those elsewhere, more

could be raised through taxation without further threatening the incentive to work.

Another alternative to direct taxation is indirect taxation, that is, taxes on consumption rather than income. However, Ireland’s value-added tax (VAT) rate, at 23% since the 20�2 budget, is among the highest in the world. More worryingly, higher VAT pushes up the cost of living, and Ireland is already recognised as a high cost-of-living location. Just 20% of survey respondents stated that when it came to cost of living, Ireland compared favourably with other FDI destinations in which they had operations, while 42% said Ireland’s cost of living was worse.

The third type of taxation is on wealth, in particular property. The single biggest contributor to the fall in tax revenue has been the loss of revenue associated with Ireland’s booming property market. However, the taxes used – in particular stamp duty – are regarded internationally as inefficient and prone to contributing to boom and bust cycles. Ireland is the exception among developed countries in that it does not have a recurring tax on property, which presents the government with an opportunity to consider a land value tax. This type of tax, on the value of sites rather than on buildings, encourages the productive use of land and makes it less attractive to hold land speculatively, which has been a major reason for Ireland’s property bubble.

Land value taxation, or site value taxation, could be a key source of stable revenue and one that is both fair (as wealthier households pay more) and efficient (as the supply of land is fixed and will not respond to changes in taxation), unlike taxes on income or consumption, which distort economic outcomes.

Ireland must facilitate key executives to come here. Junior talent joins a company to learn and leave; senior talent comes to build and stay.

John Herlihy, vice president of international SMB sales, Google



Ireland’s biggest disadvantages:Outside control of policy3

Ireland’s four main disadvantages in the eyes of global investors lie largely outside the government’s immediate control. Two relate to facts of geography. The size of the domestic market was cited as a downside by one-half of all respondents (5�%), and Ireland’s peripheral location was mentioned by nearly one-third

(3�%). The other two relate to risks associated with the current national and international macroeconomic situation: the instability of the euro zone (33%) and uncertainty about government finances (32%). The six other factors listed were each chosen by less than one in five respondents.

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physicalinfrastructure

Red tapeand

bureaucracy

High costof doingbusiness

Peripheralgeographic

location

Uncertaintyabout

governmentfinances

Instabilityin the

euro zone

Size ofdomesticmarket

Figure 6



Location matters more to financial services firmsIreland’s peripheral geographical location matters more to financial services firms (41%) than to those involved in IT or pharmaceuticals (�7%). This may seem strange, given both legislative (EU single market) and technological developments that enable internationally trading services firms to use Ireland as an export base. However, as Christian Saller, the managing director of KAYAK Europe, a technology firm, explains, geography can still matter, both for attracting talent and for doing business. When KAYAK was choosing its EMEA headquarters, both Zurich and Dublin were on its shortlist, but it ultimately opted for Zurich owing to reasons of geography. Zurich was chosen because it met two particular criteria: the ease with which KAYAK was able to hire skilled multilingual staff prepared to move to the chosen city, and the ease with which employees could get to other European locations when working. Even in online commerce, face-to-face matters.

Other challenges – high costs and bureaucracyWhile the top four factors are all largely outside the control of policymakers, other disadvantages did feature among investor concerns. The two most frequently cited of the remaining six were the high cost of doing business (�9%) and red tape and bureaucracy (�7%), with poor physical infrastructure, including transport, also registering with about one in six respondents. There were some differences across sectors. IT

firms, for example, are more concerned about poor infrastructure, both physical (32%) and ICT (19%) than those in financial services (15% and 7%). The high cost of doing business was highlighted disproportionately by firms with no presence in Ireland and no plans to set up here: 34%, compared with 19% for the whole sample.

The best small country?Since taking office in early 2011 the Irish taoiseach (prime minister), Enda Kenny, has stated on a number of occasions that he wants to make Ireland “the best small country in the world in which to do business”. According to the World Bank’s 20�2 Doing Business rankings, Ireland ranks �0th worldwide for ease of doing business, behind a number of small economies but also some larger countries, including the US (4th), the UK (7th) and Korea (8th). Ireland’s ranking fell two places from 20��, principally owing to poorer relative performances in registering property and enforcing contracts.

The table below compares Ireland’s performance with best practice globally across six headings of doing business. The metric used is the number of days associated with a procedure. As it shows, there is significant room for Ireland to improve across most of these headings. While time spent on administrative burdens relating to trading across borders and paying taxes is close to best practice globally, those associated with starting a business and registering property take up significantly more time than the one day in leading countries. In the areas of

Days spent on certain business procedures, Ireland and best practice

Area Best practice Ireland

Starting a business � �3

Construction permits 26 141

Getting electricity 36 205

Registering property � 38

Paying taxes 3.2 3.2

Trading across borders 5 7Source: World Bank 20�2 Doing Business rankings



construction permits and getting electricity, the delays associated with these procedures mean that Ireland ranks 27th and 90th respectively worldwide. These are areas well within the control of policymakers, and action taken – even if policymakers were to perceive that the actual benefit to business of one particular process is limited – would show determination to international investors, who rely on such international rankings to inform their decisions.

Costs in focus: comparing Ireland with other investment destinationsRespondents were asked to rate how Ireland compared in terms of six different sets of business costs to other locations in which they did business: wages and salaries, raw materials, cost of living, rents, utilities and infrastructure, and the overall tax burden. Ireland compares unfavourably with other destinations for FDI across all cost headings other than tax. This is particularly the case for wages and salaries, where one-half of respondents (5�%) say Ireland is more expensive, while just �6% say

Ireland’s tax and cost competitiveness compared(%)

Note. Net score "compares favourably" minus "compares unfavourably".

-40

-30

-20

-10

0

10

20

30

40

50

60

-40

-30

-20

-10

0

10

20

30

40

50

60


Wages &salaries

Rawmaterials

Cost ofliving

RentsUtilities,infra-

structure

Corporatetax rate

R&D taxcredits

Double-taxationtreaties

Personaltax rates

Traininggrants

Otherincentives

34 35 34

27

34

20

4246

38

47 46 4849 51 48

-26-21

-30

-19-14

-24 -22-16

-28 -27-28-26

-35-38

-32

3743

32

Figure 7

it is cheaper (a “net score” of -35%). The figure rises to 57% for emerging-market respondents and 69% for those with currently no presence in Ireland. High wages are an important ingredient for attracting talent, but mean that productivity has to be high to compensate. For raw materials, cost of living and rents and utilities, about two in five respondents say Ireland is more expensive, with less than one in five saying it is cheaper. These net scores are outlined in the bottom half of Figure 7 – all are negative and significant, unlike Ireland’s tax competitiveness, shown in the top half of the same figure, where all net scores are strongly positive.

The cost base: regional differencesThere are important regional variations in how expensive Ireland’s cost base appears to investors. In particular, firms from elsewhere in the euro zone view Ireland as an expensive location for business costs, for the cost of living (a net score of -46%), but also rents (-37%), wages and salaries (-32%) and utilities (-28%), while US respondents report similar scores. For firms from



developed countries other than the US or the euro zone, though, Ireland’s cost competitiveness is typically much less of an issue. On salary costs, the net score is negative but much smaller than for other regions (-9%), similar to that for cost of living (-8%), while rents has a net score of zero. For firms from emerging markets Ireland is not cost competitive in wages and salaries, with a net score of -48%. Utilities and infrastructure costs are also not competitive compared with other countries (a net score of -22%).

Looking at firms by current status in Ireland, firms not located in Ireland and with no plans to set up there found it particularly expensive for business costs: a net score of -65% for salaries, -47% for utilities, -46% for cost of living, and -33% for rents. However, while firms planning to invest in the country did view it as more expensive for wages, aside from that it was viewed as typically in line with other FDI destinations. For firms established in Ireland and planning to expand, the cost of living (net score of -�6%) was one concern, while another was the level of rents (net score of -��%).



Responding to the crisisBoosting competitiveness at the same time4

Ireland has seen one of the most dramatic economic contractions in economic activity of any developed economy in the post-war era, with nominal GNP falling by almost �9% between early 2007 and early 20�� and unemployment rising from 4% to 14% over the same period. As is the case with any severe economic downturn, there are real and human costs of adjustment.

However, as is evident from Ireland’s banking and property sectors, much economic and employment growth leading up to 2007 was related to a financial and real estate bubble, which impacted the country’s cost competitiveness. Whereas consumer prices (as measured by the EU’s Harmonised Index of Consumer Prices) increased by 2.4% a year in the EU and in the euro zone between 2000 and 2008, they increased by 3.5% annually in Ireland. Between mid-2008 and the end of 20��, however, Ireland regained some of its lost cost competitiveness: while prices increased annually by an average of 1.8% in the euro zone, prices fell in Ireland by an annual average of 0.8% during that period.

“By 2006 Ireland was not competitive,” says John Fitzgerald, head of macroeconomics at the Economic and Social Research Institute in Ireland. “Effectively the construction sector had

crowded out the trading sector, particularly in the labour market. In the short-term, the real depreciation that Ireland is undergoing at the moment will be painful, but Ireland’s economic crash will definitely have a long-run positive impact on Ireland’s competitiveness.”

Willie Slattery of State Street agrees: “Ireland is now more competitive than it has ever been, in a relative sense, given the clusters and skills here that were not here in the �990s.” Numerous interviewees say that what they noticed most was how much easier it is to hire, while some point out that wages for employees entering the workforce are down by as much as 20%. Overall, respondents’ plans for their investments reflect confidence in the future. Of the 315 respondents, only ten say they plan to reduce their level of investment in Ireland over the next three years. Extrapolations from the survey results suggest that new investments from those already in Ireland could create up to 20,000 new jobs during the same time frame. The calculations point to nearly half of these new jobs being created in the financial services sector, followed by about a quarter from IT and online industries. Split along geographic lines, about just over half would come from US-based investments, and just over a quarter from developing countries. Although based on opinion data, and not a rigorous

In the short-term, the real depreciation that Ireland is undergoing at the moment will be painful, but Ireland’s economic crash will definitely have a long-run positive impact on Ireland’s competitiveness.

John Fitzgerald, head of macroeconomics, Economic and Social Research Institute, Ireland



economic forecast, it points to very favourable sentiment towards Ireland by investors.

On the right trackNearly one-third (3�%) agreed with the statement: “I have more faith in Ireland’s new government than in the previous one”, while just �0% disagreed. Among respondents from Ireland, the net score was 64%, compared with just 10% for respondents from the emerging markets. There was also an important distinction according to experience: firms with no operations in Ireland were overwhelmingly neutral on this point (88% expressing no opinion), whereas 60% of firms planning to expand agreed with this statement.

There is a belief, however, that Irish affairs are increasingly determined outside Ireland, with more than one-half of all respondents (53%) agreeing that Ireland’s economic policy is increasingly determined by international institutions, with just 4% disagreeing. Euro zone respondents were particularly likely to agree (68%), although one-half of emerging-market respondents were neutral on this point.

Government priorities are in line with investor expectations. Respondents’ top policy prescriptions for the government are stabilising Ireland’s financial system (51%), attracting inward investment (37%), and addressing the budget deficit (30%). These priorities did not

vary substantially by sector, although financial services respondents were more likely to stress fixing the financial system (57%) and attracting inward investment (43%) than other priorities. IT respondents were more likely to stress the supply of skills. “A few years ago, all the money was in construction and banking, and so those sectors attracted the young talent,” says Lionel Alexander, vice president and managing director of manufacturing for Hewlett Packard. “Ireland’s skilled labour force was abandoning technology and the other skills that had been a hallmark of Ireland’s success. This is turning around now, although Ireland still lacks IT graduates.”

Trade-offs delineatedIn many areas, there is no trade-off between overcoming the crisis and boosting Ireland’s competiveness. For example, tackling the high cost of doing business in Ireland is both a domestic vote-winner and a competitiveness-booster. Likewise, tackling the deficit increases domestic economic sustainability and convinces international investors that Ireland is a sound place in which to do business. Other aspects of Ireland’s recovery, however, have very real trade-offs. This is particularly the case in the area of financial regulation, a topic explored in more detail on the following page.


2� © The Economist Intelligence Unit Limited 20�2

regulator” on non-core issues such as board memberships. One example shows the potential for the law of unintended consequences to undermine Ireland’s competitiveness. The Central Bank’s Corporate Governance Code for Credit Institutions and Insurance Undertakings requires that there must be �� meetings a year of the board and that members must be there in person. This has the effect of pushing key personnel and expertise in these companies off the boards of Irish operations. Interviewees point out that without the senior talent on board, Ireland will find it more difficult to stay on the radar of the key people who create jobs.

Investors interviewed believe that both the opportunity and the threat to Ireland’s competitiveness are real, with future job creation at stake. Ireland’s domestic banking system is currently being restructured, a process which is likely to result in the shedding of thousands of jobs. Bob Keogh of Goldman Sachs believes that “there is definitely scope for the IFSC to scale up and create the same number of new jobs out of the resources available from the domestic banking sector, but the regulatory set-up needs to be appropriate.”

The collapse of Ireland’s financial system over 2008 and 2009 highlights very real regulatory failures of the domestic banking system. Understandably, there has been significant reform of the regulatory environment in which financial institutions operate, including new corporate governance codes. The financial regulator has also been more proactive in sanctioning firms, with an average of eight settlement agreements a year since 2008, compared with just two in 2006 and five in 2007.

However, with significant public anger about the collapse of Ireland’s financial system, investors believe there is the risk that the need to be seen to be doing something replaces doing the right thing. “Foreign-owned financial services firms that have come to Ireland and created thousands of jobs in no way caused Ireland’s bubble but are now among those most being affected by the backlash,” says Willie Slattery of State Street Corporation. In July 20�� the Irish government launched its Strategy for the International Financial Services Industry in Ireland 20��-20�6, which had the principal target of creating �0,000 net new jobs in the sector. If Ireland wants to deliver on its target, financial regulation needs to distinguish clearly between domestic and International Financial Services Centre operations.

Interviewees spoke of the danger to Ireland’s FDI proposition of being perceived as an “awkward

Financial regulation: Getting the balance rightThere is definitely scope for the IFSC to scale up and create the same number of new jobs out of the resources available from the domestic banking sector, but the regulatory set-up needs to be appropriate.

Bob Keogh, director, Goldman Sachs Bank (Europe)



property tax. But despite the short-term costs and the greater role international institutions are likely to have in important economic decisions, investors believe that the crisis represents a huge opportunity to boost Ireland’s competitiveness. The cost of living in Ireland is slowly improving compared with other countries, following years of inflation which have left the country regarded as expensive internationally.

But while bringing down the cost of living will both win votes domestically and attract jobs from abroad, there are other areas where trade-offs may exist. The new government in Ireland has set a target of becoming the best small country in the world in which to do business by 20�6. However, its regulatory response to the collapse of the domestic banking sector is already generating concerns about heavy-handedness among internationally trading financial services firms. Getting the response right on these and other critical investment issues will be key to Ireland’s success in maintaining the four cornerstones of its FDI proposition.

Conclusion

Ireland’s unique selling proposition

Very few countries offer investors any single factor that is completely unique to that location – instead, what attracts FDI is a unique combination of drivers. The survey suggests that in Ireland’s case, its “unique selling proposition” is a bundle of four factors attractive to investors. Access to EU markets is one. The corporate tax infrastructure is another. Ireland is also recognised as a stable environment that prioritises the ease of doing business. And access to skills, both domestic and from across the EU, is a competitive strength and one that is likely to grow in importance as skills-driven international services comprise a larger share of trade and investment.

Ireland’s economic crisis has made its future ability to trade on these advantages more uncertain. Taxes will have to rise, although there are obvious candidates in the excessively generous tax credits and lack of an annual



Appendix

Yes100

(% respondents)Do you have responsibility for or familiarity with your company's international investment decisions?

Yes100

(% respondents)Are you familiar with your company's current or prospective investment(s) in Ireland?

Access to markets

Availability of key skills (eg, language)

Government incentives, including tax incentives

Legal transparency and ease of doing business

Educated labour force

Local labour costs

Strong intellectual property protections

Local non-labour costs

Access to natural resources

58

34

32

32

24

21

15

10

10

(% respondents)What is the prime motivation for your company to enter foreign markets? Select up to three.

Full survey results



Very significant Somewhat significant Not significant Not applicable/Don't know

Ease of doing business

Political stability

Cost of doing business

Fiscal certainty

Intellectual property protections

Tax incentives for investors

Regulatory incentives for investors

Access to pool of local skilled labour

Ease of attracting key mobile international staff (cost of living, quality of life, etc)

56

50

51

34

35

39

34

38

29

1340

1544

544

11253

22241

1149

1

1

1

1649

1348

1455

(% respondents)How significant are the following factors to your worldwide direct investment decisions?

Low corporate tax rate

Double taxation agreements with treaty countries

Transfer pricing taxation rules

Access to local sources of credit and funding

Training and other human resources grants

R&D tax credits

Personal tax rates

Other, including industry-specific tax incentives, please specify

46

34

23

20

20

18

15

2

(% respondents)

Thinking about fiscal incentives offered by host countries, what are on balance the two most important types of incentive foryour company? Select up to two.



China

Singapore

United States

United Kingdom

Hong Kong

Canada

Australia

Netherlands

Brazil

Germany

Switzerland

Japan

Belgium

Russia

France

Mexico

Italy

Spain

Sweden

Saudi Arabia

33

29

28

27

20

3

3

3

2

1

15

14

13

13

11

10

7

6

5

4

(% respondents)

In your view, which three host countries (excluding Ireland) offer the best overall conditions for your company as adirect investor? Select your 3 top countries.

Professional advisors (eg, law firms, accountancy firms)

Financial and business press

Inward investment agency of destination country

Annual reports

Industry colleagues

Trade fairs and exhibitions

Work colleagues

Government sources

Other, please specify

52

33

22

20

20

14

10

10

4

(% respondents)Where do you obtain information about potential investment markets? Select up to two.



Currently doing business in Ireland with no plans to change operations in the next three years

Not currently doing business but planning to invest within the next three years

Currently doing business and planning to expand operations within the next three years

Not currently doing business in Ireland and have no plans to do so within the next three years

Currently doing business and planning to contract operations within the next three years

Don't know

39

27

18

10

3

2

(% respondents)

Is your company doing business in (ie, investing in, trading with, or operating in) Ireland, or considering doing so within thenext three years? Please choose one answer only.

Less than $50m

$50m-$100m

$100m-$500m

Greater than $500m

Don't know/Not applicable

52

22

13

10

3

(% respondents)

If your company is already doing business in Ireland, please indicate the approximate value you have invested over the lastfive years.

Net addition of over 1,000 jobs

Net addition of 500-1,000 jobs

Net addition of 1-500 jobs

No net job creation

Net reduction of 1-500 jobs

Net reduction of 500-1,000 jobs

Net reduction of over 1,000 jobs


5

10

54

20

5

1

1

5

(% respondents)

If your company is already doing business in Ireland, please indicate the approximate net number of jobs you have created inIreland over the last five years.



Competitive corporate tax regime

Access to Irish market

Ease of doing business (eg, low bureaucracy, good labour relations)

Economic and political stability

Certainty/clarity of legislation

Sector-specific tax incentives (eg, R&D credits, low royalties)

Interest rates

Presence of a cluster in our industry or activity

Member of the euro zone and/or stability of the euro

Competitive labour tax regime

Access to government

Good physical and IT infrastructure

Access to EU market

Educated and skilled labour force

Ability to operate in the English language

Personal tax rates


44

25

6

2

21

19

17

16

15

15

14

12

12

12

12

11

10

(% respondents)

If your company is already doing business in Ireland with no plans to change over the coming three years, please indicate thethree principal reasons why Ireland was an attractive destination at the time of your initial investment in Ireland.






Access to EU market





Interest rates



Ability to operate in the English language




Personal tax rates


30

22

5

2

21

20

19

17

15

14

13

13

13

11

11

10

8

(% respondents)

Please indicate the three principal reasons why Ireland will remain an attractive business environment for your company overthe next three years. Please choose the top 3 only.

Less than $10m

$10m-$50m

$50m-$100m

$100m-$250m

$250m-$500m

More than $500m


40

31

15

3

3

3

6

(% respondents)

If you are planning to expand operations or invest in new operations in Ireland, please indicate the approximate value youmight invest over the next three years. Please choose one answer only.



Net addition of over 1,000 jobs

Net addition of 500-1,000 jobs

Net addition of 1-500 jobs

No net job creation


1

8

68

14

9

(% respondents)

If you are planning to expand operations or invest in new operations in Ireland, please indicate the approximate net numberof jobs you might create in Ireland over the next three years. Please choose one answer only.


Access to EU market






Ability to operate in English

Interest rates







Personal tax rates


32

29

6

3

26

24

22

19

18

17

16

15

14

13

10

9

9

(% respondents)

If your company is planning to expand operations or invest in new operations in Ireland, please indicate the three principalreasons why Ireland will be an attractive business environment for your company over the next three years.



No net job reduction



Net reduction of over 1,000 jobs


67

33

0

0

0

(% respondents)

If you are planning to contract operations, please indicate the approximate net number of jobs you might reduce in Irelandover the next three years. Please choose one answer only.

High wage costs compared to other locations

Possibility of a tax increase or removal of tax benefits

High non-wage costs, including energy and property

Peripheral geographic location/poor links to other markets

Small local market

Red tape and excessive bureaucracy

Poor physical and/or IT infrastructure

Economic uncertainty, including the future of the euro zone

Restructuring and/or downsizing of entire business

Difficulty in finding skilled labour

Lack of investment incentives


40

30

20

20

20

20

20

20

0

0

0

10

(% respondents)

If you are planning to contract operations in Ireland over the coming three years, please indicate the three principalreasons why. Please choose the top three only.

Less than $10m

$10m-$50m

$50m-$100m

$100m-$250m

$250m-$500m

More than $500m


56

33

11

0

0

0

0

(% respondents)

If you are planning to contract operations in Ireland, please indicate the approximate amount by which you expect turnover inIreland to shrink over the next three years. Please choose one answer only.


3� © The Economist Intelligence Unit Limited 20�2

Size of domestic market

Economic uncertainty, including the future of the euro zone

Lack of investment incentives

Possibility of a tax increase or removal of tax benefits


High wage costs compared to other locations

High non-wage costs, including energy and property

Red tape and excessive bureaucracy

Difficulty in finding skilled labour

Poor physical and/or IT infrastructure

Restructuring and/or downsizing of entire business



41

38

31

22

19

16

16

13

3

3

0

0

16

(% respondents)

If you have no plans to do business in Ireland, please indicate the reasons why Ireland will not be an attractive businessenvironment for your company in the next three years. Please choose the top three only.



1900-1910

1911-1920

1921-1930

1931-1940

1941-1950

1951-1960

1961-1970

1971-1980

1981-1990

1991-2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011


1

0

0

0

0

1

1

3

3

1

2

2

0

40

1

6

23

6

2

1

3

3

(% respondents)In what year did you originally invest in Ireland?

Back office/shared services

R&D

Treasury operations


Manufacturing

Customer call centre

Headquarters


32

14

12

10

9

9

3

11

(% respondents)If you are considering investing in Ireland, which business activities are you most likely to locate there?



Access to EU market

Legal and fiscal stability

Competitive corporate tax rate regime

Educated and skilled local work force

Ease of doing business in general

Access to skilled labour from across the EU

Double taxation agreements with treaty countries


Sector-specific tax incentives (eg, R&D Tax Credit)

Only English-speaking member of the euro zone

Existing clusters (eg, R&D, technology, funds administration)

Strong IT and telecoms infrastructure


46

30

29

28

24

23

16

15

14

12

10

8

1

(% respondents)In your view, which competitive advantages does Ireland have to offer? Please choose the top three only.

Size of domestic market

Instability in the euro zone

Uncertainty in relation to government finances


High cost of doing business

Red tape and bureaucracy

Poor transport and physical infrastructure

Tax burden

Poor IT and communications infrastructure

Lack of skilled labour


51

33

32

31

19

17

17

14

6

2

0

(% respondents)In your view, what are the biggest risks or disadvantages of doing business in Ireland? Please choose the top three only.



Far more expensive Slightly more expensive About the same Slightly less expensive Far less expensive

Wages and salaries

Raw materials

Overall tax burden

Cost of living

Rents

Utilities, infrastructure

13

11

5

14

12

6

21428

848

72241

31632

21834

21344

43

33

26

35

35

36

(% respondents)

How does Ireland compare to the other jurisdictions (outside your home market) in which you do business, in terms of thefollowing aspects of business cost?

Far better Slightly better About the same Slightly worse Far worse

Corporate tax rate

R&D tax credits

Network of double-taxation treaty countries

Personal tax rates

Training grants

Other incentives

23

15

14

8

8

7

1528

240

442

41241

449

1453

43

42

40

36

39

36

(% respondents)

How does Ireland compare to the other jurisdictions (outside your home market) in which you do business, in terms of thefollowing aspects of the tax regime?

Agree Neutral Disagree Don't know

The worst is over and the country's economy is improving quickly

The worst is over but it will take a few years until the economy is stable again

I expect continued fiscal and financial problems to impact the business environment over the next three years

I have more faith in Ireland's new government than in the previous one

Ireland's economic policy is increasingly determined by international institutions

12840

21035

2935

41054

3440

31

53

55

31

53

(% respondents)

Thinking about the recent financial crisis and its impact on the Irish business environment over the coming three years,please indicate whether you agree or disagree with the following statements:



Ireland will see continued strong export growth and high levels of inward FDI.

Ireland will see moderate export growth and inward FDI.

Ireland will see weak export growth and FDI.

It depends – please specify

Don't know

17

49

26

2

5

(% respondents)

In your view, what is the likeliest outlook for the growth of trade and foreign direct investment (FDI) in Ireland over the nextthree years?

Lowering corporate tax rates

Double-taxation treaty with my country

Better support for small, entrepreneurial businesses

Increased investment incentives - please specify

Better regulatory policies

Closer links between government and business

Lowering personal income tax rates

Reduced bureaucracy surrounding relocation (eg, work permits)

Fewer links between government and business

Increased intellectual property protections


14

13

13

11

11

8

8

8

5

2

6

(% respondents)

In your view, which of the following actions would do most in order to boost the investment attractiveness of Ireland foryour firm?

Stabilising Ireland's financial system (including bank recapitalisation)

Attracting inward investment

Addressing the government deficit

Reducing unemployment

Stabilising Ireland's property market (including the National Asset Management Agency and mortgage arrears)

Promoting domestic demand


Don't know

51

37

30

25

16

15

2

1

(% respondents)What should Ireland's fiscal, tax and trade policy priorities be over the next three years? Please choose the top two only.



United States of America

Ireland

India

China

Russia

Brazil

United Kingdom

Netherlands

Singapore

Germany

Sweden

Canada

Spain

Belgium

Cyprus

Hong Kong

Italy

Other

51

11

7

1

1

4

4

4

4

4

2

2

1

1

1

1

1

1

(% respondents)In which country are you personally located?

North America

Western Europe

Asia-Pacific

Eastern Europe

Latin America

Middle East and Africa

52

23

15

5

4

1

(% respondents)In which region are you personally based?



United States of America

Ireland

India

China

Russia

United Kingdom

Brazil

Netherlands

Germany

Singapore

Sweden

Canada

Japan

Switzerland

Australia

Cyprus

Hong Kong

Spain

Other

54

7

6

4

1

1

1

4

4

4

4

3

2

1

1

1

1

1

1

(% respondents)In which country are your company's global headquarters based?

North America

Western Europe

Asia-Pacific

Eastern Europe

Latin America

Middle East and Africa

55

21

14

5

4

1

(% respondents)In which region are your company's global headquarters based?



5 or fewer

Between 5 and 10

Between 11 and 20

More than 20

36

29

12

23

(% respondents)In how many countries worldwide do you have operations?

Board member

CEO/President/Managing director

CFO/Treasurer/Comptroller

CRO/Chief risk officer

Chief compliance officer

Other C-level executive

SVP/VP/Director

Head of business unit

Head of department

Manager


3

18

14

1

11

39

2

0

2

5

4

(% respondents)Which of the following best describes your job title?



Finance

General management

Strategy and business development

IT

Operations and production

Marketing and sales

Risk

Information and research

R&D

Customer service

Legal

Human resources

Procurement

Supply-chain management

Other

43

40

24

14

14

12

7

6

6

3

2

1

1

1

3

(% respondents)What are your main functional roles? Select up to three.

Under $250m

$250m to $500m

$500m to $1bn

$1bn to $5bn

$5bn to $10bn

$10bn or more

29

20

12

15

4

21

(% respondents)What is your organisation's global annual revenue in US dollars?



Financial services

IT and Technology

Manufacturing

Professional services

Healthcare, pharmaceuticals and biotechnology

Energy and natural resources

Consumer goods

Chemicals

Transportation, travel and tourism

Agriculture and agribusiness

Automotive

Education

Entertainment, media and publishing

Telecoms

Construction and real estate

Logistics and distribution

Government/Public sector

Retailing

49

15

7

7

5

3

3

2

2

1

1

1

1

1

1

1

0

0

(% respondents)What is your primary industry?

While every effort has been taken to verify the accuracy of this information, neither The Economist Intelligence Unit Ltd. nor the sponsor of this report can accept any responsibility or liability for reliance by any person on this white paper or any of the information, opinions or conclusions set out in this white paper.

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